Differences Between Management Control and Operational Control

Meaning of Operational Control

Operational control or task control is the process of assuring that specific tasks are carried out effectively and efficiently. The focus of operational control is on individual tasks or operations. For instance, it is concerned with scheduling and controlling individual jobs through a shop rather than with measuring the performance of the shop as a whole. It involves control over individual items for inventory rather than the management of inventor as a whole.

Operational control is concerned with activities that can be programmed. For instance, if the demand for an item, the cost of storing it, its production cost and production-time, and the loss involved in not filling an order are known, then the optimum inventory level and the optimum procurement schedule can be prepared. Automated plants, production scheduling, inventory control, order processing, payroll accounting, cheque handling, etc are examples of activities that are susceptible to operational control. As new- techniques are developed, more and more activities may become susceptible to operational control. For example, the production schedule that was formerly set according to the foreman’s intuition is now derived through linear programming.

Management Control vs Operational Control

The following points of distinction betweenmanagement control and operational control can be identified:

Focus.Management control concerns the whole of an organization or division. Its focus is on all the operations of an organization or unit. On the other hand, the focus of operational control is limited to a single task or operation. Just as management control occurs within a set of policies derived from strategic planning, so operational control-occurs within a set of well defined procedures and rules derived from management control.

Nature. An operational control system is a rational system because the action to be taken is decided by a set of logical rules. Rules govern the control system and judgment is involved in exceptional cases. On the contrary, in management control psychological considerations are dominant. There are very little rules and a high degree of judgment or subjective decision making are involved.

Time Horizon.Management control involves weekly, monthly or yearly time frames-whereas the time horizon of operational control tends to be day-to-day.

Degree of Difficulty. Control is more difficult in management control than in operational control due to the lack of a scientific standard with which actual performance can be compared. A good operational control system can provide a much higher degree of assurance that actions arc proceeding as desired than can a management control system.

Type of Data Used. A management control system is usually built around financial data whereas operational control dam are open non monetary, e.g., man-hours, number of items, etc. Information required operational control is often tailor-made to the particular operation. Since each operational control procedure is designed for a limited area of application it is feasible to use the basis of measurement that is most appropriate for that area. Data in an operational control system are often in real time, i.e., they are, reported as the event is occurring, and relate to all individual events. One the contrary, data in a management control system are often retrospective and summarize many separate events. Similarly, operational control use exact data whereas management control needs only approximations.

Analogies. In operational control systems, analogies within technical, electrical and hydraulic systems are reasonable and useful. Therefore, terms like feedback, network balancing, optimization, etc., are relevant. For example, an operational control system can be considered as analogous to a thermostat, which turns the refrigerator and on according to its perception of changes in temperature. These analogies do not work well with management control system because the success of a management, control system is highly dependent on its impact on people who are not like thermostats.

Role of System. In management control, the system is a relatively insignificant part of the control process. The success or failure of the management control process depends on the judgment, knowledge and other personal characteristics of the manager. In operational control, on the other hand, the system itself is relatively more important because the degree of involvement of the managers small.

Guide. The designer of an operational control system can draw on knowledge from mathematical and physical sciences to arrive at models and decision rules. On the other hand, the, designer of a management control system has no comparable body of knowledge to guide him.